Want to Prove Patience Pays Off? Ask the Founders of This 17-Year-Old $525 Million Email Empire!

Ben Chestnut and his team at MailChimp built an amazing business and became Inc.'s Company of the Year. It only took them 17 years.

Ben Chestnut (center), Dan Kurzius (center right), and their team at MailChimp built an amazing business and became Inc.'s Company of the Year. It only took them 17 years.

Jake Chessum

It's a beautiful day in his neighborhood, and Ben Chestnut is thinking about pain.

Late-afternoon sun is shining on Atlanta's BeltLine, an abandoned train track converted into a green pedestrian path. Children cluster at a cart selling small-batch raspberry-lime Popsicles. Commuters swarm past on bikes and boards and feet, the city's gleaming towers at a picturesque remove. And Chestnut, a slim and sober presence in near-monochrome navy beneath his mop of black hair, is contemplating a bicycle.

"You start a company, and then you wake up one day and realize you don't remember what any of your hobbies are," says Chestnut, 43, the co-founder and CEO of MailChimp. "It gets scary when you don't really understand what it is that you like."

He's had some time to figure that out recently. MailChimp, which spent the first half of its life figuring out what exactly it could do well--which turned out to be handling companies' email marketing--today is one of the most successful small businesses in America. Except it hasn't been small for a while, not with more than 700 employees and 16 million customers and 14,000 more signing up every single day.

Chestnut, who's watched his company grow "from startup to grownup" with a parent's mixed emotions, has some free time now that he's no longer always worrying about survival. His father recently reminded him he was once a good cyclist, so now Chestnut has a group of mountain biking friends, a Peloton at home, and a Strava addiction. He has a couple of weekend racecars, too, to go with the Tesla he drives to work.

Tonight, he's riding a cheap, lightweight company bike that someone at MailChimp, in-house quirk firmly in place, has named the Batmobile. It's somewhat apt: Take away his quick and slightly goofy grin, his ready embrace of the absurd, and what one employee calls "the Mister Rogers look," and Chestnut sometimes seems like he could outbrood Bruce Wayne.

"People will ask me, 'Your business is doing so well. Aren't you happy?' No. I'm in pain," he says. "But that's how you know you're growing."

It's an excellent problem to have, of course--one Chestnut and his co-founder, chief customer officer Dan Kurzius, have learned to embrace over the almost 18 years that they've devoted to their company. MailChimp, which grew out of a discarded web business, is profitable, still entirely owned by its co-founders, and growing by more than $120 million every year; Chestnut estimates that in 2017 it will post $525 million in revenue.

That's despite the fact that some undisclosed percentage of his customers never pay MailChimp a cent. In fact, MailChimp started succeeding when it stopped charging everybody--when it deliberately tied its fortunes to the small businesses that make up its core customers. It's kept growing at a torrid pace for years--this, while many more prominent tech companies are losing money, customers, CEOs, and credibility. MailChimp has never taken a dollar from venture capitalists or other outside investors. And long before entrepreneurship was cool, it made itself crucial to the ecosystem of new and emerging businesses. For all those reasons, in 2017, MailChimp is Inc.'s Company of the Year.

Still: Email? In an era of Instagram stories and Snapchat filters and Facebook ads, Inc.'s 2017 Company of the Year is focused on email?

It is. And for a good reason. "It's not the shiny new thing, but more the steady thing that actually works," says Neeru Paharia, who was on the founding team of Creative Commons, which developed standards for internet publication, and is now an assistant professor of marketing at Georgetown's McDonough School of Business. Maybe that's why small businesses still allocate about 10 percent of their marketing budgets to direct marketing, including email, according to Forrester, which estimates that U.S. business spent $2.8 billion on email marketing in 2017.

"It is a little surprising that in the age of all this other communication media, email marketing is still a big player," Paharia continues, but for many startups, "email marketing and content marketing are a bit more affordable and have a bit more return on investment" than things like Facebook ads and Google paid search results.

Speaking of: Through a series of ambitious partnerships with Facebook and Google, plus an array of new products, MailChimp hopes to become the answer to all of your business's marketing needs.

Email? Yes, email. "It's not the shiny new thing," says an expert, "but more the steady thing that actually works." As MailChimp keeps demonstrating.

You may think all of this expansion and recognition would make its CEO happy, given that the company spent its first several years trying not to go out of business. But Chestnut isn't wired that way. He'd rather focus on the next headache.

"We're misfits. I've always been out of place wherever I lived. And you just kind of have to embrace that," he says. "That's the thing that makes you different. That's the thing that's going to make you brave."

If you're not already a customer, you probably know MailChimp from its quirky ads on the Serial podcast ("Mail. Kimp?"), from its nearly nonsensical recent ads (convicts escaping a "JailBlimp"), or maybe from just the bottom tag on emails you get from everyone. A quick search of my inbox turns up MailChimp-powered missives from local bookstores and artists, restaurants from San Francisco to Copen­hagen, New York City's Citi Bike program, various online retailers, writers, and all sorts of professional organizations.

E-commerce businesses account for about a fifth of MailChimp's customers, distantly followed by nonprofits and educational organizations. John Foreman, a company veteran who's now its vice president of product management, says that MailChimp's typical business customer "has a company of maybe eight employees, no marketing team, and their budget is their checkbook. They're asking, 'I just quit my day job. How do I make this work?' "

Cheaply and simply. Ease of use is MailChimp's calling card, and the service is free at first. As long as you're trying to email only up to 1,999 people at once, MailChimp won't charge you. Once you hit that 2,000-recipient mark--or if you want more features for a smaller list, or to send more than 12,000 emails per month--MailChimp charges start at $10 per month.

A little over a year ago, Amanda Brinkman was working at an arts-related nonprofit and dabbling in T-shirt design on the side, when she watched one of the presidential debates. After Donald Trump interjected that Hillary Clinton was "such a nasty woman," Brinkman whipped up a pink-hearted "Nasty Woman" T-shirt design and posted it for sale online, promising to donate half of the proceeds to Planned Parenthood. The shirt went viral, earning more than $260,000 so far and launching her advocacy-oriented e-commerce business, Shrill Society.

As her business has grown, Brinkman says that email--even more than social media channels--has been her "most effective and direct marketing." And email, to her, means MailChimp.

"While I do use Google AdWords and occasionally run Facebook ads, those typically don't have a high ROI for me," she says, whereas MailChimp, whose features include A/B tests, "helps me really test and refine what I should be messaging."

Some founders of more established businesses complain that MailChimp's software is difficult to customize for more advanced design, and express incredulity that the company still doesn't provide telephone-based customer service: "I spend a lot of money with them, and I don't even get an account rep?" pointedly asks Jenna Tanenbaum, the founder and president of smoothie-subscription service Green­Blender. Still, she acknowledges, it would be more expensive to switch to a MailChimp competitor like Sailthru or Constant Contact--and a huge headache to migrate hundreds of thousands of email addresses to a new service.

MailChimp won't disclose its customer-retention rate, so it's unclear how many of those 14,000 daily new customers are sticking around. But Chestnut seems uninterested in building out services for bigger customers. Instead, MailChimp is expanding by offering more marketing services to its existing universe of small businesses. After two years spent working on this project, in 2017 MailChimp unveiled partnerships with Facebook, Instagram, and Google. The way they'll work: If you're already sending out emails using MailChimp and you want to buy a Facebook ad or Google retargeting ad, now you can do so within your existing MailChimp software, using the contacts or images or text you've already uploaded for your email newsletter. You won't pay MailChimp anything more for the service--and Chestnut won't take a cut from the tech giants, either.

That means Facebook and Google "have no leverage on us," Chestnut says. "They can't squeeze." So the original formula applies: Make it easier for entrepreneurs to buy Facebook ads, to reach more customers, and to build their customer lists, and MailChimp can charge more for the bigger lists. As its customers' reach expands, so does MailChimp's.

"VCs started knocking on our door" when a competitor IPO'd, Chestnut says. "We were just utterly confused by them."

The company isn't stopping there. At presstime, MailChimp was readying to launch landing pages, essentially stripped-down webpages that you can build within its software, to promote your business. It's planning a platform that will put a small-business spin on the enterprise-sales software Salesforce is known for. And MailChimp, which sends more than a billion virtual messages a day, is even testing a service that will let you ship postcards around the world. Yes, old-school direct mail, sent to the homes of people who shopped at your online store and perhaps left something behind in their digital shopping cart.

"I need to show you my suffer score!" Over dinner, Chestnut is excited again about pain--this time inflicted during his morning run, tracked and rated for "suffering" by the Strava app. (He's paying more attention to his health, which he says he sacrificed for the business for years; after surveying the heavy meat and cream sauces on the menu of a local Italian joint, he quietly announces that he's recently switched to "a plant-based diet.")

The next morning, Chestnut regrets the loaded language. He's not, he wants to clarify, "a real sadomasochist," he says. "I didn't mean real pain and suffering. I love when there's a problem to solve. I love it when my brows are furrowed."

Still, his attraction to suffering, however figurative these days, reflects an upbringing that had its share of real pain and alienation for one of the few children of a Thai Buddhist to grow up in the small town of Hephzibah, Georgia (population 3,900).

Chestnut's father, an Army code breaker sent to Southeast Asia during the Vietnam War, met his mother, a Thai cook, in Bangkok. The couple eventually moved stateside, bringing with them two of Ben's mother's four children from a previous marriage; her ex-husband kept the other two in Thailand. (Ben reconnected with his distant half-brother as a teenager, over MSN Messenger; now that branch of the family runs a business that supplies some of the knitted monkey hats that MailChimp routinely gives to employees.)

In Georgia, Chestnut's father taught on base at Fort Gordon and his mother set up a hair salon in the family kitchen. That business inspired both Ben and one of his sisters, who eventually tried to set up her own salon with some partners. The partnership faltered, the business failed, and Ben's sister eventually had to declare personal bankruptcy--in the 1980s, when that could mean a lifelong stigma. "It hurt her really bad," Chestnut recalls. "Now bankruptcy's a rite of passage for people, but back then it ruined you."

Growing up in such an environment shaped Chestnut, but so did growing up Asian at his mostly white school, where he was bullied for looking different. "That's why I took karate lessons," he says now, matter-of-factly. Karate brought him more than self-defense; it was through karate, during high school, that he met a fellow student named Teresa Urch, who would eventually become his wife.

After studying design at the Georgia Institute of Technology, Chestnut went to work for the Cox media group in Atlanta in the late '90s, and wound up working on an early MP3 service there. Needing to hire a coder, Chestnut asked friends for recommendations. Dan Kurzius, a lapsed DJ then working in real estate, thought it was a music-related job--and didn't immediately admit that he programmed DJ sets, not computers. He taught himself how to code, and went on to become Chestnut's tech and real estate partner.

He's also Chestnut's "human whisperer." "I've always been the people person, whether employees or customers," says Kurzius, a soft-spoken skateboarder whose rumpled shirtsleeve mostly hides an elaborate, autobiographical tattoo snaking down his left arm. Like Chestnut, Kurzius grew up in a struggling small-business family; his father ran a bakery-deli in Albuquerque that was eventually forced out of business by big bakery chains. Kurzius blames the stress of that failure for causing his father's fatal heart attack a few years later, when the MailChimp co-founder was 12.

If you remember what MP3s are, you won't be shocked to hear that the Cox business didn't prosper. After getting laid off in 2000, Chestnut started Rocket Science Group, a company originally focused on web design, and later teamed up with Kurzius and one of Chestnut's college friends, a tech guy named Mark Armstrong. Initially, they focused on selling to tech companies. Cue the tech bubble bursting. Then they pivoted to airline and travel companies, "which worked great until 9/11." Then they pivoted to real estate. "For a few years, we were calling ourselves cockroaches," says Chestnut.

Early on, the founders focused on bigger companies. "We were horrible at it," says Chestnut.

His wife's steady salary as a registered pediatric nurse sustained Chestnut and their two sons during the worst of it; Kurzius, married with two daughters, scraped by. (In 2008, Chestnut and Kurzius bought out Armstrong, who did not respond to requests made through LinkedIn for comment.)

One recurring problem: Neither Chestnut nor Kurzius enjoyed sales--or dealing with the Deltas and Coca-Colas and other formal, bureaucracy-laden corporations dominating Atlanta. "We were horrible at it," Chestnut recalls. "The only companies we could relate to were small businesses, and they always asked for email marketing."

That jogged something in Chestnut's memory. There was an old product feature that Rocket Science Group had developed, as part of an abortive email greeting card project, that had been abandoned to "the parts bin," a concept Chestnut now regularly name checks with employees. (Are you working on something that doesn't immediately fit into a MailChimp project? Don't trash it--file it in your parts bin, and wait until you need it.)

The founders pulled out the old marketing software, dusted it off, and started shopping it around to their smaller customers. "Our day jobs felt like going to these big organizations and pitching to them, and it was miserable," Chestnut says. "But we really loved our nighttime jobs, which were helping the small businesses use this email marketing app."

By 2006, the checks from such side gigs--$10,000 here, $20,000 there--were starting to add up. Chestnut and Kurzius decided to go all in on email and on small businesses. Under the MailChimp name--which Chestnut attributes to, variously, his parents' pet monkey in Thailand; a puppet from his childhood, an albino monkey named Albert; or the popularity of monkeys on the e-greeting cards they'd formerly designed--they bore down.

But they didn't bother seeking out funding, a decision Chestnut attrib­utes to ignorance more than principles. Having lived through the dot-com bust, and seen once seemingly successful startups collapse, "we just didn't understand the finance thing," he says of his company's earliest days.

In 2007, when competitor Constant Contact filed to go public, "VCs started knocking on our door," Chestnut remembers. "We were just utterly confused by them." (Eschewing venture backing enabled MailChimp to focus on its small-business base; investors always wanted Chestnut to pivot to enterprise software, he says, because customers and immediate returns would be much larger.)

MailChimp's tipping point came in 2009, when Chestnut made a somewhat counter­intuitive decision: "Let's just make the whole thing free." If your customers are small businesses, make it easy and cheap for them to try you out, his thinking went. That means they'll be happy once they have to pay for your services, because it means their business is growing.

The freemium plan was the first time MailChimp directly tied its fortunes to those of its small-business customers. And in terms of sheer volume, it was a swift success. "We had about a few hundred thousand users on the system, and within a year it was a million," Chestnut recalls. "Within another year, it was two million. And it just kept growing from there." Freemium--and focus--had worked.

After a day at MailChimp's headquarters, I wanted to go stare at a blank white wall somewhere. The offices are hyper-decorated, with the sensibility of a Munchkin on speed and more than a hint of bro culture: One conference room has tiki-style palm fronds; another has rows of Kurzius's skateboard collection; yet another has neon signs modeled after the ones at the Clermont Hotel, home to a famed, long-running local strip club. Gigantic tea cozies are knitted around the columns holding up the converted warehouse's ceiling, and every spare space seems decorated with chimps: big statues, small figurines, larger-than-life-size posters made from crayon, cake frosting, and dyed basmati rice. Chestnut has chimps on a fake movie poster behind his desk, showing a human-ape kiss ("I love that it just throws people off"), and even on his socks. "Not MailChimp socks," he swears. "When you run a company where the chimp is the mascot, people give you chimpanzee-related things all the time."

But the riot of color and decor and stuff underscores MailChimp's long-standing cultivation of artistic types. The co-founders and their employees still talk a lot about hiring artists and reaching out to the creative community. Mark DiCristina, a top MailChimp marketing executive, used to troll Kickstarter for arts-related crowdfunding campaigns that were falling short of their goal; shortly before the campaign deadlines, he'd use his company credit card to make up the difference.

But MailChimp is far past such guerrilla campaigns these days. After the Serial sponsorship, which cost the company all of $300,000 and got its name mentioned on Saturday Night Live in 2014, MailChimp now spends more than $10 million a year on marketing. Chestnut, characteristically, has mixed emotions about the Serial effect and the new level of growth it touched off. "It was our best quarter ever," he says, but his reaction to the SNL mention lacks a certain jubilation. "The world knows about our brand, but we've got to really step it up now. It wasn't a happy moment."

Around the same time, Kurzius and Chestnut started hearing from customers that wanted to do more than send out promotions to mailing lists.

"It's never been about email," says Foreman, the VP of product management. "It's been about small businesses, helping them create customers and grow their business. So what other channels can we provide?" It's innovation out of necessity: MailChimp still avoids cultivating big customers. But, Chestnut says, "when you serve small business, the churn rate is awful. Fifty percent are dead within five years. You're constantly having to innovate really, really fast. You just have to tinker, tinker, tinker, tinker, tinker."

As MailChimp looked to move beyond email, it spent years trying to get meetings with Facebook and Google--and then convincing the tech giants that it could deliver them more small-business customers. "The thing about Google, Facebook, anyone we partnered with: None of them care as much about small business as we do," Chestnut claims. (A Google spokesperson declined to comment; a Facebook spokesperson said the company has spent $1 billion supporting small businesses since 2011.)

The thought that made MailChimp soar? "Let's make the whole thing free."

Meanwhile, MailChimp still has plenty of issues to work on as it figures out what it means to be a grownup. Diversity is a big one, as Chestnut and his employees acknowledge; despite the company's headquarters in a majority African American city, Chestnut is the only nonwhite face in a seven-person C suite, one that has two women. Rapid expansion has created some other growing pains. A few years ago, Chestnut's invite to an all-hands meeting told customer-service workers to shut off chat, leading many to believe they were about to be fired. "You need leadership training," one of his employees told Chestnut afterward. He got some, and eventually hired a raft of professional executives to take over much of the company's day-to-day oversight.

Handing off those responsibilities caused some of the recent listlessness that sent Chestnut searching for hobbies, but also put him back where he's most comfortable.

"Every time there's new strategy you have to get rid of old dogma. I love doing that," he says. "I go around and I tell people, 'Remember what I said? I was wrong. It's time to change.' " Suddenly, Ben Chestnut is beaming, aglow with the anticipation of that next beautiful headache.

How MailChimp (Finally) Made It

MailChimp's path was never easy or straightforward. That's why there's so much to learn from it.

Keep Your Eye on New Opportunities​Since its early days as Rocket Science Group, the company has shifted from specialized web development for many kinds of big corporate customers (first tech companies, then travel companies, and then real estate companies) to, finally, email marketing software for startups.

Be a HoarderEarly on, Chestnut and Kurzius worked on a failed e-greetings project and then shelved it for years. When small businesses started asking them for help with email, their solution was in that project that they'd set aside. Chestnut still encourages staffers to save such ideas. "Anytime there's been a threat or an opportunity," he says, "we have parts in the bins that we could just assemble really fast. That speed is so important."

Free Is Your FriendMailChimp's tipping point, in Chestnut's view, came when it introduced a freemium model, which lets customers use MailChimp's services for free. Initially, Chestnut wanted to give away one product (collecting subscribers) and charge for another (sending emails), but "it was really, really difficult to break our product into two pieces," he recalls. So the company decided to "just make the whole thing free." Customer numbers shot up. So did MailChimp's revenue.

Above All, Stick to ItIt took more than five years for MailChimp to find its sweet spot, and about a decade for Chestnut to feel like it was starting to succeed. That experience influences how he chooses which founders he mentors now. "If they say, 'These hackathons are hard. Do you have advice on how to build a deck?' I don't want to talk to them," he says. "When they've hit some really tough time--struggling to deal with a partner who's uncooperative, the real struggles of the small-business owner--those are the ones that I invite in."